The senior population isn’t just exploding in the United States. It’s a global phenomenon that is offering seniors housing developers in the U.S. business opportunities abroad.
Experts in the senior living field talked about high-end seniors housing opportunities in China, Japan, Mexico and India during a webcast sponsored by Irving Levin Associates.
Mexico
The market for seniors housing in Mexico has significant potential for seniors housing developers, said Jim Moore, president of Moore Diversified Services, a seniors housing and healthcare consulting firm based in Fort Worth, Texas. While currently seen more as a vacation destination, U.S. and Canadian citizens are increasingly moving there because of the more affordable cost of living and because healthcare in the country is excellent and affordable, Moore said. Aggressive marketing to seniors living in the U.S. and Canada will help get them more interested in living in seniors housing in Mexico, he said.
India
The seniors housing market in India is just beginning said Brad Perkins, principal and executive director of Perkins Eastman, a global planning, design and consulting firm. The country has a large seniors population but is only starting to address how to deal with their aging population. Because it is in such early stages, said Perkins, there are no clearly compelling senior living housing models developing yet. U.S. developers interested in the Indian market need to be aware that there is only a limited segment of the Indian population who has the resources to get into high-end senior living housing, Perkins said, and developers will face some difficulties entering the market because the government is not offering supportive legislation, the cost of land is high and finding good laborers to build projects is often challenging.
Japan
While the seniors housing market in Japan is still young, the market is huge and growing and many seniors are used to and have the resources for a high-quality lifestyle, said Perkins. The cultural tradition of adult children caring for their aging parents and grandparents is changing as more children are dispersed because of their employment, and, with the country’s low birth rate, there are fewer children to care for parents, meaning the interest of Japanese seniors and their families in seniors housing options is only likely to increase in the coming years. Japan’s seniors, Perkins said, are open to both rental and entry-fee options. Difficulties for U.S. developers include high labor and building costs, lack of sites and regulations.
China
China is the largest market out there, offering U.S. developers major opportunities and serious challenges. “International operators have plenty of challenge as they look to China,” said Bill Pettit, “however … the size of the market, the emerging wealth from adult children, really affords a fascinating opportunity for years to come.” Pettit is the president and chief operating officer of Merrill Gardens, an operator of retirement communities in four states that has been in China for three years.
“The biggest word of caution I can offer is … we can’t make the simple assumption that what works well in the U.S. will just automatically work in China …,” said Moore. “This includes design, operations and how the consumer will respond.”
There are a number of existing seniors housing models already in China, Perkins said, but not one that is yet clearly successful.
Of big concern to developers, said Perkins, Pettit and Moore, is determining who will pay for seniors housing. The government is offering few resources and those who are seniors now have lived much of their lives in extreme hardship. Those who do have the resources are a small group: retired senior government officials and military and those returning to China from overseas.
There is potential that the younger generation of adult children who have had success during the country’s economic boom will pay for housing for their parents but that potential is tempered by the results of China’s one-child policy.
Having fewer children to share the responsibility of caring for aging parents and grandparents could be a barrier to the potential for developing seniors housing or it could be a boon.
With fewer children to provide hands-on care, there may be more openness to living in seniors housing. But with the responsibility for potentially four aging parents and eight grandparents being shouldered by two adults, the finances may not be there.
Another challenge U.S. developers face in China is attracting quality workers. While seniors living housing can draw from China’s well-trained nursing professionals, workers to manage operations and administration and to build housing are harder to come by, said Perkins, Pettit and Moore, because these are considered lower-prestige jobs.
Those developers entering the Chinese market thinking they can just transplant the U.S. model will have a rough time of it, said Pettit. In the U.S., lifestyle amenities are stressed, but in China, while lifestyle amenities are desired, seniors place more value on having access to quality healthcare services, Pettit said.
U.S. developers must also resist the pressure to overbuild, Pettit said. “Everything gets built big and fast in China,” said Pettit. “The problem is that the financial adaptation to senior housing has not been established in China yet and so it is really, really easy to overbuild if you allow capital to drive the concept of size.”